Tuesday, October 8, 2013

A Judicial Estoppel Smackdown: Priceless

The court of appeal holds that statements made to obtain the approval of a class action settlement can form the basis to apply judicial estoppel.

Larry Pitts brought a class action against LA County for increasing a utility tax without voter approval. The case settled and the county agreed to hold a voter referendum on the tax and to create a $ 65 million fund for refunds. In his brief supporting final approval—which occurred after the election, in which the increase was approved—Pitts argued that the election was a primary benefit of the settlement and that its value was “: Priceless.” With a colon. Followed by a capital P. Like in a MasterCard commercial.*

The court approved the settlement, awarding Pitts’s counsel over $7.6 million and an incentive fee of $50,000 to Pitts. A year later, a different plaintiff challenged the validity of the tax election on various grounds. Pitts filed his own motion to enforce the settlement under Code of Civil Procedure § 664.4, asking the court to invalidate the election.** The superior court denied the motion and Pitts appealed.

No way, said the court of appeal. Under the doctrine of judicial estoppel, Pitts couldn’t argue that the election was a “: Priceless” benefit secured by the settlement in order to obtain a large monetary award and attorney’s fees, and then, almost two years later, make an “opportunistic flip-flop[ ]” and argue that the election was illegal. That is precisely the kind of fast and loose litigation conduct that judicial estoppel is supposed to prevent.

Affirmed.

*This went down in 2008; counsel’s reference was presumably more au courant back then.

**The election challenge is joined this appeal, hence the different case name. The plaintiff lost. Nothing of procedural interest occurred.